While opponents like Steve Delbianco, Executive Director of
NetChoice and online advocate, view the Act as a "cash grab” and burdensome for
small businesses that use the Internet, supporters, like Governor Haley Barbour (R-Miss.), see things differently. In
August, Barbour wrote
an article for the National Review Online, reminding weary Americans that
this is not a new tax or a tax on online businesses, but an easier way for the
state to collect the sales tax owed to them. "In the 45 states with a sales
tax, if the retailer doesn’t collect the sales tax at the time of purchase, the
purchaser is legally required to pay a "use tax” to the state. Many consumers
don’t realize this or choose to ignore it, and, as a result, no taxes are paid
on most online purchases.”

It’s estimated that $23.3 billion worth of taxes will have
been lost in 2012 alone – that is a significant amount of taxes not being
collected by states. If we were to look at Arizona on its own, Amazon.com owed the
state $53 million in back taxes. An October settlement not only allowed the
state to collect on at least some of that back tax, but also forced the online
retailer to start collecting sales tax from its Arizona consumers in February. It
is estimated that this could "funnel
more than $11 million a year in sales-tax revenue to the state.” And that
is just with sales tax from
Amazon.com. That’s the estimated cost twice over of the 2013-2017
Five Year Transportation Facilities Construction Program – transportation
facilities (such as roads) that online retailers with warehouses in the state
(like Amazon.com) use but do not currently contribute to; Transportation
facilities that small businesses in Arizona do contribute to through sales tax.

Sales tax has come to be common ground for small businesses
and brick and mortar giants, like Wal-mart and Target. Since 2003, these stores
have been required to pay sales tax on online orders because of their physical
presence as a store in states. Online retailers, like Amazon.com, have been
able to avoid taxes, on the other hand, because, while they have had
warehouses, they do not have a brick and mortar store. So, while online retailers use many of the state services,
they do contribute to the running of them. Arizona’s Five Year Transportation
Facilities Construction Program is designed to take care of all state-run transportation
needs, such as roads, freeways, highways, and airports – all the transportation
needs that an online retailer use to deliver their products to the consumer. They
also have access to other state provided services, such as aide from the local
police force and firefighting services, all things paid for by taxes collected
from the state. But many states are afraid to push online retailers to collect
sales tax because it means a possible loss of jobs. "When South Carolina
declined to exempt Amazon from collecting the state's 6% sales tax on purchases
by people in the state, the company stopped building a warehouse and prepared
to leave, throwing thousands of jobs into jeopardy,” according
to the Seattle Times. As a result, South Carolina has postponed tax
collection for Amazon.com until 2016.

Cindy Dach, of Changing Hands Bookstore in Tempe, likens it
to a shell game: Amazon.com uses local roads and the local police force, then hires
and pays minimum wage.
"States have the right to ask for
more. We want quality jobs created,” she says. Dach spoke of a
friend whose husband is from Columbia. "He
was paid minimum wage at an Amazon warehouse. He stood on his feet for 8-hour
shifts, and was let go the day after Christmas.” The jobs that Amazon.com is bringing
in, the ones states are so afraid to lose, are not sustainable. And, if on top
of that, they continue to not pay sales tax, then they are doing the state and
its workforce more harm than good. "The
[Marketplace Fairness Act] isn’t going to level the playing field. Amazon will
continue to undercut local businesses on prices, but it will bring much needed
sales tax into our states. A purchase is made - sales tax is collected.”
Just like in a brick and mortar store.

Book retailers have long been treated to the unequal world of
online versus brick and mortar stores. It’s acknowledged in the book
world that it won’t be the e-reader that kills the bookstore, but Amazon.com. And
book retailers are not alone. From the convenience of your home, you can
now order everything from dog food to electronics, groceries, clothes, music and
wine
– and it can be there the
same day. "Our retailers have such a hard job, all they are asking for
is fairness," U.S.
Rep. Peter Welch (D-Vt.) told state lawmakers. "People go in to use it
as a showroom and go home and order on the internet and do not pay sales
tax."

If this seems like a rant against Amazon.com, there is a
reason for it. The bill itself is nick-named the "Amazon tax”, and if it
weren’t for the online giant, it probably wouldn’t exist. So, why would
Amazon.com support a bill that seems to be directed at them? For starters, it
simplifies things for everyone. Right now, Amazon.com has to create agreements
with each individual state and not necessarily given an easy way to collect
sales tax. The Marketplace Fairness Act not only gives states the right to "require
out-of-state retailers to collect sales tax at the time of purchase and remit
those taxes on behalf of consumers,” it also requires a
simplification of sales tax laws.

Online retailers are able to avoid
collecting sales tax because of two outdated Supreme Court decisions; National
Bellas Hess v. Illinois Department of Revenue and Quill v. North Dakota. Both of these
decisions were made to protect businesses from confusing and burdensome sales
tax obligations. Both were also before the internet. Paul Misener, Amazon’s VP,
testified
before the Supreme Court that "widespread collection no
longer would be an unconstitutional burden on interstate commerce, and Congress
feasibly can authorize the states to require all but the smallest volume
sellers to collect.” However, complicated sales tax laws could
potentially be a burden. Because of this, states pursuing collection rights
would be required to simplify their sales tax laws in one of two ways: 1) adopt
measures put in place with the Streamlined
Sales and Use Tax Agreement (SSUTA) or 2) states can meet five
simplification mandates listed in the bill. (Read about the Marketplace
Fairness Act requirements here.)

The bill being proposed doesn’t require a state to start
collecting sales tax. Congress is giving states the right to collect sales tax. What is being done on a national level
is not enforcement, but expanding the rights of the individual state to collect
on the taxes they are due. It is not a new tax, it does not trample on the
rights of small businesses. The bill attempts to create an equal playing field
between brick and mortar stores and online retailers, by creating equal tax
requirements for both.